May 5, 2016

GUEST ROOM | The Price of an Anti-Competitive Burrito

ByDavid Tauber | May 5, 2016

Chipotle is in the food services business; they operate in the competitive for-profit world. Stroll past their storefront on your next drive down South Meadow Street and competitive dynamics affecting their enterprise become clear: Moe’s Southwest Grill, Five Guys Burgers & Fries, Panera Bread, Taco Bell and many others all within a minute’s drive.

Priced too high, Chipotle customers may opt to dine at a more affordable, but arguably inferior alternative. If the queue becomes too long, others may turn away. Chipotle has incentives to price fairly, offer distinctively tastier food than competition (hence the fresh, non-GMO, farm-sourced ingredients), and train employees to pack and fold burritos in assembly line manner. Let’s hope the marginal difference in folding four burritos per minute to three permits Chipotle to offer compensating wage differentials too. It’s easy to sympathize with the plight of menial, repetitive work, plus Chipotle employees have to deal with the regular chicanery of indulgent college students asking for half steak, half chicken orders.

For the most part, consumers and competitors admire Chipotle. They do right by the customer. Consider their reaction to an E. coli outbreak earlier this year: Chipotle paused operations for four hours to address food safety and promised everyone a free burrito. Coincidentally, burritos aren’t the only thing they give away for free. When I go to Chipotle, I always get a water cup, and it’s not one of those wimpy four ounce Greenware cups either. Long story short, Chipotle is a respectable company — turning $6.80 chicken burritos into profit, $475 million to be exact (more than $250,000 per store). Some argue the price is too high. I tend to disagree and recoil at the thought of substituting the joy of barbacoa and extra guacamole for dollar menu items and homemade PB&J.

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That said, why does Cornell Dining charge $7.99 for a burrito? Why does a FreshTake tuna salad sandwich prepared daily by Cornell Dining cost $5.29? A single banana $1? I struggle to find an adequate lunch without feeling guilty about the value. Cornell Dining is out of line and we should be outraged. First, the commingling of a for-profit dining service and non-profit university edges on hypocrisy. Both Cornell Dining and the University declined information requests regarding net income figures in recent years. Perhaps there are numbers worth suppressing. Second, Cornell Dining’s strategic decisions appear ruthlessly motivated by profit. Just this year, the Ivy Room began charging an additional fee to serve food in recyclable and compostable to-go containers. Sustainability deceptions aside, is it not more costly to employ dishwashers? Nowhere else on central campus does the fee apply. Adding insult to injury, the Ivy Room also condemned its last remaining bang-for-buck option, instituting a 200 percent price hike to the Eggs Grand Slam. Apparently, unionized hens rang Gail Finan, director of Cornell Dining, during the summer session and threatened to stop laying eggs unless she paid up. Since students are relatively transient consumers and collective conscience is erased every four years, she appeased them. We, the students, are being squeezed.

Cornell Dining is a monopoly-like institution, and that needs to change. Any student with a 30 minute gap between weekday classes has limited options on central campus. The 2015 Perceptions of Undergraduate Life and Student Experiences Survey revealed that nearly one in five students skipped meals due to financial constraints. A warped economic experiment on campus is to blame.

Cornell Dining’s high prices imperfectly regulate a tragedy of the commons problem. Tragedies of the commons problems occur when shared resources are depleted due to self-interest. Consider campus fitness centers. If Cornell offered free access to the workout centers, gyms would be overcrowded by weightlifters in half hour lines waiting to use the20 pound dumbbell sets. Charging a fee makes sense because the quality of working out becomes more enjoyable and productive. At day’s end membership to the fitness centers serves a leisure purpose and those who opt out build the same muscles traversing the slope. Eating is not a leisure activity — not in between midday classes, anyway.

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Pricing students out of quick, convenient lunch is unethical. According to Cornell Dining, “Dining with us is more than a meal — it’s a vital part of the Cornell experience.” I agree wholeheartedly that eating on campus is a valuable part of the college experience. I can tie the foundations of my closest relationships to breaking bread on campus. That’s why Cornell Dining’s lack of integrity in fulfilling its own mission so troubles me: “[Cornell Dining is] committed to serving high-quality foods that are healthy and creatively prepared with genuine care for a diverse community.” What care for Cornell’s diverse socioeconomic community is embodied in selling $5 bubble tea and packaged goods at exploitative margins? Cornell has scale and students should benefit from it. Whether or not Cornell Dining intends its mission to be perceived as purely aspirational, it’s clear they want students and faculty to believe in their commitment. Aligning their brand with the notion of genuine care, we ought to evaluate their performance.

To extend the tragedy of the commons problem to Cornell Dining, we must envision chaos: a Terrace salad line stretching to Ives Hall, empty table searching at Trillium like parking spot hunting in Manhattan, and, worst of all, Cornell Dining ceasing to churn profits. Affordable food won’t provide an end-all-be-all solution. The Anabel’s Grocery team presents a partial fix to campus food insecurity with their much-anticipated food collective. While admitting that there’s no single solution, boldness to problem solve when the administration stood idle is commendable. To end food insecurity on campus, the administration will need to act. They have two options. Either they lower prices to affordable levels or present the same proposition to outsiders. Let Chipotle on campus. What business wouldn’t want to sell food to more than 12,000 captive consumers? Funds raised by auctions for dining facilities could potentially spare students from the next impending tuition increase. Even if opening campus dining to market forces fails, it would do so while prioritizing student interests. It’s time for a rethinking of campus dining — I suggest starting with reasonably sized water cups.

David Tauber is a senior in the College of Industrial & Labor Relations. Responses may be sent to opinion@cornellsun.com. Guest Room appears periodically this semester.